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The Trump administration wants to seize what it calls a once-in-a-generation opportunity to overhaul the nation's tax code. Today they outlined some of the changes the president wants to see. They include a sharp cut in business taxes and a simpler individual tax system. The White House says those changes could help rev up economic growth. Critics say the proposed tax cuts could balloon the federal deficit. NPR White House correspondent Scott Horsley reports.
SCOTT HORSLEY, BYLINE: The Trump tax plan is still in the early stages, little more than bullet points on a single printed page. But Treasury Secretary Steven Mnuchin has big ambitions.
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STEVEN MNUCHIN: This is going to be the biggest tax cut and the largest tax reform in the history of our country, and we are committed to seeing this through.
HORSLEY: Mnuchin did some Trump-style marketing of the plan this morning at a forum sponsored by The Hill newspaper here in Washington. The plan calls for cutting the top corporate tax rate from 35 percent down to 15 percent. Mnuchin says that lower rate would also be available to partnerships and other businesses both large and small that currently pay taxes at the individual rate.
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MNUCHIN: Our objective is to make U.S. businesses the most competitive in the world.
HORSLEY: Today's 35 percent tax rate for corporations is one of the highest in the world. Though, thanks to tax breaks, many American companies pay a lot less.
On the individual side, Trump's plan would have just three tax brackets instead of seven with a top rate of 35 percent down from 39.6 percent today. Mnuchin says the plan would also double the standard deduction, so millions of taxpayers who now itemize would no longer need to.
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MNUCHIN: Our objective is simplifying personal taxes. For most Americans, we think they should be able to do their taxes on a large postcard.
HORSLEY: Tax breaks for mortgage interest, charitable giving and retirement savings would be preserved, but many other popular breaks would disappear, including the deduction for state and local taxes. The plan is broadly similar to one Trump released during the campaign in which more than 80 percent of the savings went to the top 20 percent of the income ladder.
Gary Cohn, who directs the president's National Economic Council, insists this plan is designed to do more than give a windfall to the wealthy.
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GARY COHN: This tax reform package is about growing the economy, creating jobs. It's about the economy.
HORSLEY: Indeed, Treasury Secretary Mnuchin is counting on that to prevent the tax plan from blowing a hole in the federal budget.
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MNUCHIN: The tax plan will pay for itself with economic growth.
HORSLEY: That's a claim Republican tax cutters have been making since the Reagan administration. Unless you skipped history class like Ferris Bueller, you know it hasn't worked out.
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BEN STEIN: (As economics teacher) Does anyone know what Vice President Bush called this in 1980? Anyone? Something-d-o-o economics - voodoo economics.
HORSLEY: Trump's business tax cuts alone are expected to cost the government nearly $4 trillion over the next decade. Even conservative economists acknowledge faster economic growth will offset only a fraction of that. Some analysts even warn the tax cut could slow economic growth by forcing the government to borrow more money, crowding out private investment.
Maya MacGuineas of the Committee for a Responsible Federal Budget says if policymakers want to encourage growth, they ought to be willing to pay for it.
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MAYA MACGUINEAS: We've seen time and time again that tax reforms that are paid for grow the economy more than those that aren't. What I don't want to see is that this tax reform is going to be paid for by magic.
HORSLEY: Administration officials plan to spend the next month working with lawmakers, listening to stakeholders and filling in the details of the tax plan. Secretary Mnuchin would not say how the plan would affect the president's own taxes. He added, Trump still has no intention of releasing his tax returns. Scott Horsley, NPR News, the White House. Transcript provided by NPR, Copyright NPR.
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